Distribution, Distribution, Distribution
I went to a panel called "Startup Success 2006" last night using free tickets from my girlfriend. It was an interesting event with some very interesting people present. There were many nuggets of wisdom dispenced by serial entrepreneurs like Joe Krauss, but the one observation that stuck with me was from Reid Hoffman, the CEO of LinkedIn. It verbalized very nicely something that I have been observing myself and am looking to better address going forward with CommunityWalk.
With consumer facing stores the saying is "location, location, location". McDonalds may not be nearly as high quality as any of it's competitors, but if it owns all the best locations then it will draw in more people than any of it's competitors.
On the Internet you could say that a domain name is roughly equivalent to location (if it is memorable then people will come back), but Reid's point was that it is really broader than that. He basically said that distribution is the web's equivalent for location.
A lot of entrepreneurs (including myself) focus so much on making a quality product with all the bells and whistles. At the end of the day, though, the vast majority of consumers out there have never heard of any of the startup products that are flooding the market these days. Distribution becomes far more important than feature x in this situation. Even if people do find out about more than one product, very few are going to take the time to try out each product. More than likely they will simply use the first product that comes along that helps them solve the problem they were trying to solve in a reasonably efficient manner.
Personally I think I need to improve a great deal in this area. I've been so focused on creating a quality product and relying on word-of-mouth as my only distribution channel that I've fallen behind some of my competition. Luckily there is plenty of room to catch up in and I've got some great ideas to turn this around. This doesn't mean sacrificing future functionality at all, but it does mean reprioritizing that functionality to target better distribution channels.
With consumer facing stores the saying is "location, location, location". McDonalds may not be nearly as high quality as any of it's competitors, but if it owns all the best locations then it will draw in more people than any of it's competitors.
On the Internet you could say that a domain name is roughly equivalent to location (if it is memorable then people will come back), but Reid's point was that it is really broader than that. He basically said that distribution is the web's equivalent for location.
A lot of entrepreneurs (including myself) focus so much on making a quality product with all the bells and whistles. At the end of the day, though, the vast majority of consumers out there have never heard of any of the startup products that are flooding the market these days. Distribution becomes far more important than feature x in this situation. Even if people do find out about more than one product, very few are going to take the time to try out each product. More than likely they will simply use the first product that comes along that helps them solve the problem they were trying to solve in a reasonably efficient manner.
Personally I think I need to improve a great deal in this area. I've been so focused on creating a quality product and relying on word-of-mouth as my only distribution channel that I've fallen behind some of my competition. Luckily there is plenty of room to catch up in and I've got some great ideas to turn this around. This doesn't mean sacrificing future functionality at all, but it does mean reprioritizing that functionality to target better distribution channels.
posted by The Entreprexplorer | 6:43 PM
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